OREANDA-NEWS. November 16, 2012. Polymetal International plc (LSE: POLY) (together with its subsidiaries, including JSC “Polymetal” – “Polymetal”, the “Company”, or the “Group”) is pleased to provide an update on Ore Reserves and Mineral Resources for Tsokol, Ozerny, Avlayakan, and Dalniy deposits according to JORC Code 2004, reported the press-centre of Polymetal.

Highlights
As of July 1, 2012 Ore Reserves at our four deposits (Tsokol, Ozerny, Avlayakan, Dalniy) were estimated at 4.4 Mt of ore with the average grade of 7.2 g/t of Au Eq1 containing 1.0 Moz of Au Eq (86% gold, 14% silver). Ore Reserves were estimated using gold price of USD 1300/oz and silver price of  USD 23/oz. This is the first estimate of Ore Reserves for all of these properties with additions representing 7% of the Group’s reserves as of 1 January, 2012.

All of the properties belong to operating processing hubs owned by Polymetal. Two deposits are already in production (Tsokol, Avlayakan) with the remaining two (Ozerny, Dalniy) expected to start producing ore and generating cash flows within the next 18 months.

Discovery costs of approximately USD 80/oz of reserves (including original asset acquisition costs) are very attractive given high grade of the deposits, the ability to process ore at the existing processing facilities with very modest further investment, and further significant exploration upside.

As of July 1, 2012 Mineral Resources (in addition to ore resources) were estimated at 2.3 Mt with the average grade of 4.8 g/t of Au Eq containing 0.36 Moz of Au Eq (88% gold, 12% silver). Mineral Resources were estimated using gold price of USD 1500/oz and silver price of USD 26/oz.

Substantial exploration potential identified, particularly at Ozerny and Tsokol.

“These additions to ore reserves are very important for the Company as they allow us to extend the life-of-mine of both Khakanja and Omolon by 2 years while materially improving the grade outlook compared with other remaining reserves at these operations” said Vitaly Nesis, CEO of Polymetal. “Such results demonstrate excellent returns on investment in our brownfield exploration activities and we expect further reserve additions at Khakanja and Omolon in 2013”.

Asset details
Tsokol Kubaka forms the part of Omolon operations and is located 3 km away from the Kubaka mill. Open-pit mining at the deposit started in Q1 2012 and is expected to continue till the end of 2016 at the rate of 200 ktpa followed by 2 years of underground mining at 100 ktpa. All ore will be processed at the Kubaka mill.

Tsokol is a conventional low-sulfide epithermal deposit with main veins open along strike (down plunge). Substantial further exploration potential for narrow-vein selective underground mining exists at the property which will be assessed in due course as the pit deepens.

Ozerny is a satellite deposit to Khakanja and located 70 km from the processing plant and accessible only by winter road. Ore from Ozerny will be processed at Khakanja in 2013-2016 at the average rate of 200 ktpa.

Ozerny is a large brecciated shear zone on the contact between volcanic and sedimentary rocks. Mineralisation is open at surface along strike in one direction with active exploration drilling ongoing (6,192 m drilled, 44 thousand m3 of trenches made in 2012). Excellent potential exists to expand the size of reserve by both resource conversion and identifying ore body extensions by step-out drilling.

Avlayakan is a part of the AK standalone green-field exploration project with a trial open-pit mine feeding the Khakanja processing plant. AK is located 740 km from Khakanja with ore transportation limited to summer months due to seasonal sea navigation. It is expected that open-pit mining will continue until 2014 followed by underground mining in 2015-2018 enabling average ore shipment rate of 70 ktpa.

This approach to ore utilisation is expected to change if additional significant reserves are discovered at AK project enabling the construction of a stand-alone new operation with on-site processing facility. Active drilling is ongoing at the AK project (6,760 m drilled in 2012) with the objective of identifying new high-grade veins. Polymetal expects the development decision on the AK project to be taken in Q4 2013.

Dalniy forms the part of Omolon operations and is located 5 km away from the operating Sopka mine. Sopka is 150 km away from the Kubaka mill with ore transportation limited to winter road. Pre-stripping at Dalniy is expected to commence in Q3 2013 with ore mining to start in 2014. High-grade ore is expected to be trucked to the Kubaka mill in 2015-2017 at 100-150 ktpa while low-grade ore will be processed at the Sopka heap leach facility to be launched in 2015. The actual tonnage split (internal cut-off grade) between high-grade and low-grade ore will be determined at the time of the mining based on then prevailing metal prices and actual operating costs.